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This whole debate reminds me of the argument against the original income tax before the 16th Amendment. If you look at Pollock v. Farmers' Loan & Trust Co. from 1895, the Supreme Court actually ruled income taxes unconstitutional before the amendment. I think we're headed for a similar showdown with unrealized gains taxes. The government will try to implement them, someone will sue, and eventually the Supreme Court will have to decide. Looking at the Court's current composition and their typical approaches to constitutional interpretation, I'd bet they'd strike down any attempt to tax pure unrealized gains.
Interesting historical perspective! Do you think there's any chance they could rule differently based on how they define "realization"? Like could they expand what "realized" means rather than striking down the whole concept?
That's an excellent question. There is definitely a possibility they could redefine "realization" for tax purposes. The Court has shown willingness to evolve certain definitions over time. For instance, they could potentially rule that certain events short of an actual sale might constitute "realization" for tax purposes - similar to how they already treat some constructive sales or mark-to-market provisions for certain securities dealers. But a blanket tax on all unrealized appreciation would likely face much stricter scrutiny since it would fundamentally change our entire income tax system.
Has anyone actually read the full Glenshaw Glass opinion? I just did and I'm not sure it's as clear-cut as some are making it out to be. The case was really about whether money from punitive damages counted as income, not about unrealized gains specifically. The phrase everyone quotes about "clearly realized" gains was part of a broader definition and might not be the constitutional barrier everyone thinks it is. I'm not saying unrealized gains taxes ARE constitutional - just that this particular case might not be the slam-dunk argument against them that people claim.
You're right that the case wasn't specifically about unrealized gains. But the Court's definition of income has been consistently applied in subsequent cases. Check out Eisner v. Macomber where they specifically addressed stock appreciation!
Great point about Eisner v. Macomber! That 1920 case is actually more directly on point than Glenshaw Glass for unrealized gains. The Court ruled that a stock dividend wasn't taxable income because the stockholder's proportional ownership didn't change - they had the same relative interest in the company, just represented by more shares. The Court emphasized that there was no "severance" of the gain from the capital. This case established that merely holding appreciating assets, even when that appreciation is represented by additional shares, doesn't constitute taxable income without an actual realization event. It's probably the strongest precedent against taxing unrealized capital gains, since it dealt directly with appreciation in stock value rather than the broader income definition in Glenshaw Glass.
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One thing to consider is that your EIN categorization should match what you'll be using for your North American Industry Classification System (NAICS) code. For SAAS businesses, you'll likely use code 541511 (Custom Computer Programming Services) or 518210 (Data Processing, Hosting, and Related Services). Both of these would align with selecting "Service" as your business category on the EIN application.
Thanks for bringing up the NAICS code - I completely forgot about that part! Do you know if I need to decide on the specific NAICS code before filing for the EIN, or can I just select "Service" now and figure out the exact NAICS code later?
You don't need to have your specific NAICS code figured out before applying for your EIN. You can select "Service" now for your business category, and determine the precise NAICS code later when you file your first tax return or when applying for specific licenses. When you do need to select a NAICS code, take some time to review the options carefully because it can affect industry-specific data for your business. For most SAAS companies, 518210 (Data Processing, Hosting, and Related Services) is typically the most appropriate, but if you're doing significant custom development for clients, 541511 might be better.
I literally just went through this last month for my analytics software startup. I selected "Service" and had no issues. FYI - if u also need to register for state sales tax, that can get way more complicated for SAAS businesses cuz every state treats software subscriptions differently for sales tax purposes. Some treat it as a service (not taxable in many states) and others as a digital product (taxable). Thats where I ran into the real headache!
This is such an important point! I got my EIN easily but then got hit with a sales tax audit in 3 different states because I didn't realize I needed to collect sales tax for my SAAS in those jurisdictions. Did you find a good solution for figuring out the state-by-state requirements?
@Nathaniel Stewart I ended up using a service called TaxJar that helps track sales tax requirements across different states for SAAS businesses. It integrates with most billing platforms and automatically determines which states require sales tax collection based on your customer locations and revenue thresholds. The key thing I learned is that economic nexus laws mean you might need to collect sales tax in states where you have no physical presence once you hit certain revenue thresholds usually ($100k-$500k depending on the state .)For software subscriptions, about 20+ states now consider it taxable digital goods. TaxJar handles the registration process and filing in multiple states, which saved me from having to research each state s'specific rules individually.
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Something similar happened to me last year and I finally got it resolved by filing a police report for theft. Sounds extreme but it worked! Once I had the police report, I sent it to both Chase and the IRS with a formal letter stating that I would be pursuing criminal charges against anyone withholding my rightfully owed tax refund. Magically, within 2 weeks my refund was reissued. Sometimes you have to play hardball when everyone is passing the buck. Just make sure you document EVERYTHING and keep all communications professional.
I went through this exact same situation two years ago with a $4,800 refund that went to the wrong account due to my tax preparer's mistake. Here's what finally worked for me: First, definitely contact the Taxpayer Advocate Service as mentioned earlier - they were crucial in my case. But also file a formal complaint with the Treasury Inspector General for Tax Administration (TIGTA) at https://www.treasury.gov/tigta/contact_report_waste_fraud.shtml. This creates an official investigation into the IRS's handling of your case. Second, send a certified letter to Chase's Executive Customer Relations department (not regular customer service) citing 12 CFR 210.28 - this is the federal regulation that governs erroneous ACH deposits. In your letter, state that under this regulation, they have an obligation to work with the originating depository financial institution (the Treasury) to resolve erroneous deposits. Third, contact your state's banking commissioner to file a complaint against Chase. Banks hate regulatory complaints and often resolve issues quickly to avoid further scrutiny. The key is creating multiple pressure points simultaneously. It took about 6 weeks, but I eventually got my full refund reissued. Don't give up - this money is legally yours and there are established procedures to get it back, even if everyone initially claims it's not their problem.
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Has anyone else had their ERC amended returns rejected? I filed mine with help from one of those ERC specialty firms, and the IRS rejected everything saying we didn't qualify. Now the firm is saying they don't provide audit support unless I pay additional fees! Total nightmare.
Sorry to hear that. What was the reason they gave for rejection? Was it related to the partial/full shutdown requirement or the gross receipts test? Many of these ERC mills were approving everyone regardless of whether they truly qualified under the rules.
This is exactly the kind of situation that highlights why working with reputable ERC consultants is so important. Many of the "ERC mills" that popped up were more focused on volume than actually ensuring businesses qualified. If your amended returns were rejected, you'll want to carefully review the IRS notice to understand their specific objections. Common issues include: not meeting the required decline in gross receipts, failing to demonstrate a qualifying government shutdown order affected operations, or issues with the wage calculations. You should definitely push back on that consulting firm about audit support - any legitimate ERC consultant should stand behind their work, especially if they assured you that you qualified. Many states are also investigating these ERC companies for misleading practices. If you're dealing with an audit or rejection, consider getting a second opinion from a qualified tax professional who can review your original qualification determination. Don't pay additional fees to the same firm that may have gotten you into this mess in the first place.
CosmicCommander
Have you checked your transcript? Sometimes it shows more info than WMR
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Giovanni Colombo
•Use taxr.ai to check ur transcript, it explains everything in plain english. saved me hours of googling random codes
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Anastasia Ivanova
I feel your frustration! I went through the same thing last year - stuck on "Return Received" for almost a month. Turns out my return got flagged for additional review (nothing wrong, just random selection). The key is patience, even though it's maddening. A few tips that helped me: - Don't check more than once a day, it really doesn't update more frequently - If it hits 21 days from your filing date, then you can legitimately escalate - Keep records of when you filed and when you started checking status The automated phone system is brutal, but if you do call, try calling right at 7am when they open - slightly better chance of getting through. Also, your transcript on irs.gov might show more detailed codes that explain what's happening, though they're cryptic without knowing what they mean. Hang in there - most "stuck" returns do eventually process, it's just the IRS being overwhelmed as usual.
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